GBP/USD Fundamental Outlook at 1500 GMT (EST + 0500)

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5065 level and was supported around the $1.4945 level. A Bank of England quarterly inflation survey was released today in which U.K. inflation expectations climbed to their highest level since November 2008. This increase in expectations has added to speculation that interest rates could rise. Consumers now expect inflation to be 2.5% higher one year from now, up from the previous reading of 2.4%. The other big factor in the U.K. now remains the general election. Concerns that Tory leader Cameron could win the election but fail to form a majority government are weighing heavily on sterling. BoE member Posen said the U.K. economy has successfully avoided deflation and added the economy would have been considerably worse absent quantitative easing policies. Cable bids are cited around the US$ 1.4455 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the US$ 0.9060 level and was capped around the $0.9120 level.